A BIG, HAPPY, FAMILY
Probably the most distinctive thing about the Onan
Company, going all the way back to the founding carried through to the present,
is the unusual treatment of the workers and the resulting loyalty and high
morale — even in the toughest times.
Onan and his son, Bud, who succeeded him as chief executive officer, were firm
in their belief that fair and compassionate treatment of their workers would
have a high priority at all times, and this philosophy was so ingrained and
successful that it has been carried on even after the Onans left the scene.
D.W. Onan felt strongly that workers should be paid
well for their labors, but, in addition, if a company was profitable it should
share those profits with the people who made it possible. That's a popular conception today, but back
in the 1920s and 1930s it was an unusual attitude on the part of management.
D.W. Onan was a pioneer in the country regarding
profit sharing. Informally he shared his profits with his workers in several
ways from the very beginning, and in 1952 he instituted a generous Profit
Sharing Plan that continues in modified form to the present.
Profit sharing was only one of many ways the Onans
showed their appreciation to workers.
The liberal benefits over the years have made the Onan Company a model
for others to follow.
The Onans were certain that by treating employees
generously, the workers, in turn, would more than make up for it with high
productivity, low absenteeism, high morale, low turnover, and generally be the
big, happy family the Onans sincerely desired. That is exactly what has
happened. There are literally hundreds of examples of how this
policy has succeeded. Typical of remarks
is one made recently by Ruben Solee, who started with Onan back in 1951. He said he had been offered another job and
promptly turned it down. "I told
them no. I love Onan as much as I love
my wife. It's the people here—you don't
often find people like these. I used to
work in the electric lab, and I remember how D.W. Onan would come around on
Saturdays to say hello. He'd say, 'Come
down and visit my place in Florida.' I
worked with Jim Hoiby, Tom Valenty, Bud Onan—all extraordinary people."
Further evidence that Onan workers regard the
company as much more than just a factory in which to put in their hours can be
found in the way they have regarded union over the years. There have been. several attempts by unions to represent Onan
workers, but all, with one unusual exception, have failed. At the Twin Cities plants there have been
union elections in 1950, 1960, and in 1979 and all were soundly defeated.
In the 1950 attempt by the CIO to organize the workers,
the plant workers rejected representation by the CIO by a wide margin, but the
tool and die workers elected to be represented by the International Association
of Machinists. The Tool and Die
department, which numbers about 18 employees, has been represented by the IAM
ever since. In 1960 it was the United Auto Workers that tried to organize the
Onan factory workers; union representation was again turned down. In 1979, an
election seeking representation by the IAM resulted in a rejection by factory employees.
There also have been three attempts to organize workers at Onan's plant at
Huntsville, Alabama with the first two votes ending in a defeat for union
representation and the results of the third election were contested by the
The majority of Onan workers obviously have felt
there was no need for third party representation. And even if there were no impact on other
workinq conditions, third party representation easily could change the friendly
relationship between employees and management that has been built up during the
past 60 years. The rejection of union representation by the Onan work force
probably would never have happened if it wasn't for D.W. Onan's original
philosophy that each employee must be treated as an individual and that mutual
good faith and shared success is a very essential part of a solid business
In the early years D.W. Onan did his sharing in a
very informal way. His original idea of profit sharing was a healthy bonus at
the end of the year for each of his small crew and a five or ten dollar bill
for a worker on his or her birthday.
Onan's idea of medical coverage was to pay a worker's hospital bill plus
wages while away from the job from company funds. His idea of company social
activities was a spontaneous party to celebrate a big order or a significant
personal event in the life of a worker.
As the company grew, D.W. Onan realized he would
have to formalize his system of benefits, and he was able to do so without
reducing them. On the contrary, as the company
became larger it also became more profitable and the benefits became even more
During World War II, when profits were plentiful,
D.W. Onan not only shared with his employees, but he set aside a generous
amount each month for all workers who had been called into military
service. Other companies around the
country copied his idea until the U. S. government stepped in and outlawed any
similar plans in the future, The Onan
plan, however, was exempted because it had been started early in the war. When the war ended, Onan workers who served
in the military all received a healthy bonus of several hundred dollars, based
on the length of time spent in the military.
Most similar plans paid the person only if he or she returned to work,
while the Onan plan paid each person regardless of whether or not they returned
The Profit Sharing Trust set up by D.W. Onan in 1952 was one of the nation's
first and most generous programs. All
employees became eligible after two years, and not a cent of employee money was
involved. The entire program was funded
by company profits. The plan, funded
with pre-tax dollars, provided for up to 15 percent of each person's annual wages,
payable upon retirement, or in certain cases, after 10 years of service.
The program, now called the Onan Profit Sharing
Plan has been modified several times since it was started. Another benefit program includes a thrift
incentive feature where workers can add to their savings with their own
contributions. For each dollar contributed
in a given year by an employee to his or her own fund, the company matches that
with a contribution of at least 25 cents, with up to an additional $1.00
matched company contribution depending on sales growth and profitability.
The company has all of the traditional employee
benefit programs, including medical, surgical and hospitalization insurance,
life insurance, disability insurance, paid holidays and up to five weeks
Back in the days when the company was smaller, Onan
had a traditional Christmas party each year that evolved into a company-wide
Christmas breakfast each December. All
employees were invited to breakfast, which was featured by the announcement of
how much was being contributed to the Profit Sharing Trust. The unusual part of the breakfast was the
frank assessment of how the company performed financially during the year. D.W. Onan, and later his son, Bud, told all
employees what the company did in sales and profits, and why. For a privately
held company, this frankness was highly unusual, but there's no question it
helped boost employee morale.
All the Onan sharing with employees had had
dramatic results with its relationship with workers. For years the absenteeism rate was two-thirds
below the average for similar businesses in this area. And annual employee turnover traditionally
has been less than five percent. Today with about 2,500 employees worldwide,
the average length of service for all Onan employees is eight and one-half
years. About 15 percent of U.S. employees
have been with Onan for 15 years or more and there are about 150 workers with
more than 25 years service.
Onan workers are also unusually active in events of
their own choosing. There are leagues
for bowling, softball, golf, tennis, trap shooting, archery, volley ball and
other sports, and a retirees club.
It would be inaccurate to say management-employee
relations today at Onan are the same as they were years ago when D.W. Onan knew
the first and last name of each and every employee. Things have changed, but every attempt has
been made to continue the philosophy of sharing with employees.
Bud Onan, who took over as chief executive officer
following the retirement of his father, was keenly aware that it was his job to
prepare employees for the change from a small, closely-knit company to a large,
necessarily more impersonal, operation.
His concern about this change came through in a letter he wrote to all
employees on May 25, 1955.
The letter started: "A few years ago, it was
an easy matter to make sure everyone at Onan knew what was going on - and
why. Now, because of the problems of
size and complex operation, it's not so easy.
It's impossible to personally discuss plans and changes with each of
you. The next best thing is a personal
letter like this one, from me to you."
His letter contained details about changes in the
company, including plans for new products and the announcement that for the
first time Onan had named non-family members to be officers of the company. He
revealed that the four heads of major divisions at Onan had been elected
officers of the corporation. They were
Hi Hascall, vice president, sales; Jim Hoiby, vice president, engineering;
Jerry Olson, vice president, manufacturing; and Jack Shea, vice president,
Bud Onan felt this change was a milestone for the
company, a leap from a family-run organization to a more conventional
corporation, and it worried him. He included a chart showing the company's new
table of organization, but Bud Onan wasn't comfortable with the chart, filled
with boxes and lines. He said in his letter, "I would like to stress one
thing about organization charts. No
chart drawn on paper can completely and fairly picture an organization. People do not easily fit into blocks on a
piece of paper.
Organizations are people, and just as people and
circumstances change, so do organizations—and the charts that reflect
them. A chart is not a means of fitting
people into arbitrary niches. It is not
a limitation on initiative. It really works the other way. An organization chart is useful only in
helping to define each of our current responsibilities, the authority we may
exercise, and to whom we are accountable for our activities. We all like to know where we're at."
Bud Onan concluded his message by saying, "We
are not a stuffy group around here. We
have no intention of being so. Dad
always believed in an 'open door' policy.
So do Bob and I. We cherish and
want the friendly and informal interchange of ideas that has helped to build
this company. We want the kind of
organization where each of us has the chance for individual expression, and
individual opportunity. The fact that
several of you are now officers of this corporation certainly proves that
opportunity exists, and will continue to exist."